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Why Despite Disastrous Start, The “World’s Most Bearish Hedge Fund” Is Short Everything

Several years ago, we first described Horseman Capital’s Global Fund, as “the world’s most bearish hedge fund” for a simple reason: of all existing asset managers, Horseman may be the one with the biggest and longest net short in history (during the longest bull market in history). Indeed, as shown in the chart below, after last going net short in 2011, Horseman has gone over 7 years being net bearish the market, with its latest net exposure a whopping -88.14%, and a gross short position an unprecedented 160%.

And while for Horseman, and its CIO Russell Clark, this chronic bearish position was hardly a curse, with the fund outperforming the S&P not only in 2018 but for most years in the 2011-2017 period, 2019 – with its near record bear market rally – has been less forgiving, and after plunging 7.9% in January, the fund tumbled by the same amount in February as stocks continued their relentless rally higher to start 2019. As a result, Horseman has started the year with its worst 2-month performance on record, tumbling 15.1% in just the past two months.

So with stocks soaring, and Horseman betting the farm against further upside (while fighting central banks in the process), CIO Russell Clark says that what investors wanted to know is two things: 1) why I have I remained so bearish into such a long bull market; and 2) why don’t I really think it matters that the Federal Reserve seems to be moving dovish again.